Quote: (09-07-2012 02:03 PM)WestCoast Wrote:
My take is still the same and it should remain as a piece of a diversified portfolio because you're acting as a lender instead of investing in say a bank. His post is accurate and I mentioned previously that the numbers were "wall streeted out" ie, inflated. I'd recommend buying a ton of notes in $25 increments.
I'm not pulling out of lending club. With the defaults I'd guess things will settle at around 4-6%, minus (unfavorable) taxes. WC is right that that it's a diversification tool, and in that context you need to be buying $25 notes and spreading your investment out in as many notes as possible, in order to get as close to that 15% (or whatever your target) default rate as possible.
I am signed up to trade notes on LC as well, but I haven't started doing it yet. A year down the line, a possible strategy would be to sell off existing notes, to minimize defaults (assumption: notes in 2nd/3rd year more likely to default). The idea would be to lock in 10%+ gains for a year, then sell the note off, and start all over again.